European Drug Makers: More Innovative Than U.S. Companies?

Are U.S. drug makers more innovative than their European counterparts? The answer is yes, according to a 2006 paper published in the journal Health Affairs that examined the number of first-in-class medicines that were brought to market by U.S., European and Japanese pharma and biotech companies from 1982 to 2003.

The author of the study, Donald Light, an academic doc who just started a visiting professorship at Stanford, reanalyzed the data from the 2006 paper by controlling for the size of companies’ investment in research and development. All other assumptions remained unchanged from the original study, said Light.

Light found that U.S. companies actually discovered fewer new drugs than you’d expect, given their proportion of R&D spending. Europe brought more new treatments to market than would have been expected from its proportion of R&D dollars. And Japanese drug makers were the most productive, according to the reanalysis.

“It would appear that American research provides poorer value,” said Light. U.S. research productivity has been “low and flat in proportion to the large company investments in R&D, while the number of major new drugs credited to Europe is high and increasing in proportion to company investments. Why is American research performance not better?”

The work was funded by the TI Pharma project, a collaboration of industry and academic partners in the Netherlands. Drug industry partners on the project include Amgen, GlaxoSmithKline anad Schering-Plough, according to the group’s website.

Comments (5 of 13)

This is pretty straightforward actually. Drug companies in the us spend a lot of time making minor changes to old drugs so that they can extend their patents in the us. Those extended patents aren't valid in a lot of the rest of the prod which requires you to create an entirely new drug to get patent protection. Also by allowing generics more easily, they force companies to innovate instead of rely on rent-seeking.

11:48 am June 29, 2010

Porque wrote :

Why is the regulatory efficiency that governmental agencies (e.g., FDA) not considered? You can run a race with the world's fastest and if you hold an iron rod across the finish line, none shall pass untill you lift the iron bar. Perhaps, in other countries, regulations are more relaxed. I agree w/ Mike, US Government has a lot to do with it.

9:36 pm August 27, 2009

Biostatisticisn of 20 years wrote :

I agree with "lies, damn lies, and regression"...(I believe that quote ended with "staististics")

This was "borrowed" and very selective data to prove a point. Their assertion hasn't convinced me in the least. They will have to do better- and tighter analyses than this.

10:40 am August 27, 2009

Dale VanderPutten wrote :

It is merely an artifact of pharma going biotech. If you look at the numbers, all the action is in biotech where the number of NCE's quadruples during the period while overall NCE's go down and everything else is essentially flat. Big pharma have been outsourcing invention and innovation for a decade and the comparison of the 82-92 numbers vs 93 -03 numbers are much more interesting than the resgional comparsions of an activity which is essentially global and even more so now than during the period reprted in the article.

1:46 am August 27, 2009

Paul wrote :

It is my sense that, broadly speaking, the US is very good at drug discovery, whereas Europe's strength is in development and commercialization. How many licensing deals do you read about where a US pharma company is in-licensing a new drug candidate from a European company, versus the other way around? I've not read the original paper, but my gut tells me that what is going on is that European companies in-license the drugs that have been discovered by US companies and have already been significantly "de-risked" by making it through early clinical trials, then they progress them to market. This approach would certainly allow you to post big numbers in terms of drugs brought to market, and it would make your dollar efficiency look good since you're buying programs when the drug has a 1 in 20 chance, rather than starting with early research and a 1 in 50,000 chance.